Addressing Uncertainty about Future Airport Activity Levels in Airport Decision Making (2012) / Chapter Skim
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Pages 10-38
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Primer on Risk and Uncertainty in Future Airport Activity P a r t I
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13 As noted in Section 1.1, airport activity is subject to a significant degree of uncertainty. Some of this uncertainty derives from the fact that airports are part of the larger aviation industry, and some is due to the specific characteristics and circumstances of individual airports.
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14 available, but fundamentally this guidebook does not differ in its treatment of risk and uncertainty. 2.2 Sources and Types of Uncertainty Facing Airports • Airline restructuring or failure.
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15 forecast. More fundamentally, the historical relationships captured in the model may not continue into the future due to structural changes in the market.
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16 35 37 39 41 43 45 47 49 51 53 55 2000 2002 2004 2006 2008 2010 2012 2014 Pa ss en ge r E np la ne m en ts (M illi on s) Actual Traffic TAF 2001 TAF 2003 TAF 2005 TAF 2007 TAF 2009 Source: Hartsfield-Jackson Atlanta International Airport operational statistics and FAA TAFs.
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17 The following sections provide examples where unforeseen events and changing conditions, not accounted for in the original forecasts, had a significant impact on an airport, either positive or negative. These examples were selected to illustrate the difficulties airports face as a result of air traffic uncertainty and in no way are meant to suggest any deficiencies in the decision making of the airport authorities.
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18 In recent years, there have been efforts to develop STL as an air cargo hub to take advantage of its excess capacity. In 2009, the public–private Midwest-China Hub Commission was established to develop an implementation plan for air cargo services focused on China (St.
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19 tors (including the 9/11 attacks) contributed to US Airways scaling down its BWI operations and moving operations to Philadelphia.
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20 0 2 4 6 8 10 12 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 Pa ss en ge r E np la ne m en ts (M illi on s) Actual Traffic 1987 Master Plan Forecast (Baseline)
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21 (accounting for 79% of seat capacity in 2000) , plus service to the San Juan Islands off the coast of Washington (URS et al., 2004)
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22 0 50 100 150 200 250 300 350 400 450 1985 1990 1995 2000 2005 2010 2015 2020 Pa ss en ge r E np la ne m en ts (T ho us an ds ) Actual Traffic TAF 2000 TAF 2003 Master Plan Forecast United Express/ SkyWest exits in 2001 Allegiant enters in August 2004 and rapidly develops service Allegiant opens base at BLI in January 2008 Source: Bellingham International Airport Master Plan Update (URS et al., 2004)
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23 its failure) , after which traffic grew by 4.3% per annum so that by 2008 passenger traffic levels were 21% below its precollapse levels.
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24 traffic levels, followed by Virgin America a year later. Passenger levels declined in 2008 and 2009, with JetBlue, Southwest, and Mesa all making significant cuts (of more than 10%)
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25 In the aviation sector, procedures used to account for risks and uncertainties have traditionally been ancillaries to the methods used for developing demand or air traffic forecasts. This is because in the early stages of the aviation planning process, decisions are made regarding the intended use of forecasts, and a method (or set of methods)
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26 This procedure is fairly common in air traffic forecasting since it can be easily incorporated into standard forecast ing techniques, including market share analysis and econometric modeling. It is also one of the easiest procedures to implement once a forecasting model has been developed.
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27 Advanced procedures have been developed to incorporate uncertainties into forecasting. These address some of the concerns highlighted in the previous sections, particularly with respect to quantifying the probability of alternative outcomes and forecasts.
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28 population forecasts by the United Nations over two decades to define predictive intervals for more current UN population projections (Bongaarts and Bulatao, 2000)
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29 • The same fitted distribution of the relevant variable is used throughout the entire forecasting period (i.e., time-invariant property of the distribution) resulting in the range of probable outcomes widening over time.
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30 in the context of airport planning may include a series of projections. The questionnaire is distributed to each respondent separately.
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31 Risk and Uncertainty Analysis Example: Portland International Airport The 2008 Airport Master Plan Update for PDX provides forecasts of unconstrained passengers, cargo, general aviation, and military aircraft operations for the years 2012, 2017, 2027, and 2035. The forecast incorporates probabilistic elements and is based on a review of the FAA's TAFs, historical demand data, and inputs from airport planning stakeholders and representatives from the City of Portland.
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32 stakeholders (e.g., human safety and welfare, infrastructure enterprises, business firms, and governments)
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33 The sections that follow describe some of the approaches that have developed in academia and industry to better address risk and uncertainty in airport decision making, including theoretical methodologies, practical applications, and diversification strategies. 5.1 Flexible Approaches to Airport Planning with greater ease or lower costs than if no flexible options were considered (McConnell, 2007)
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34 • Staged investment. Staging investment as a series of outlays, which allows abandonment of the project if conditions change.
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35 As previously noted, the flexible planning approaches put forward in the literature remain largely conceptual and have not been applied in any airport planning projects. Likewise, real options methodologies, while used in other industries, have not been applied to any real-world airport planning projects.
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36 • The airport has identified terminal space that could be required for future security screening checkpoints. In the interim, this space is used for retail operations, thus allowing the airport the flexibility to convert the retail space to additional security processing when traffic levels (or new security protocols)
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37 In order to ensure that the master plan could remain relevant over a wide range of future scenarios, and to obtain buyin and feedback from stakeholders, the master plan involved extensive consultation processes with stakeholders, industry experts, and the community (discussions with Michael Matthews, director of the master plan)
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38 Addressing uncertainty and risk in the airport environment can go beyond the physical planning of the facilities to other aspects of airport strategy. Diversification involves broadening the airport's traffic and revenue sources to avoid being heavily exposed to one particular type of risk and to reduce overall volatility.
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39 It should be noted that some of these opportunities for diversification may be constrained by the FAA Grant Assurances (e.g., FAA Grant Assurance 21: Compatible Land Use) and similar local revenue bond ordinances.
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40 practical examples of flexible planning have been found to include fairly pragmatic ideas such as land banking, swing gates, and common-use facilities. Although there is little formal analysis of the benefits of these approaches, it can be argued that the success of these approaches is reflected in their increased use in airport planning.
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